Chief Stephen Odell Tries to Stress 'Subtle Luxury' to Find Lost Customer NicheVolvo Cars, once a Swedish luxury-car powerhouse, has become little more than Ford Motor Co.'s problem child.
Posting losses and losing market share, Volvo had appeared destined for the auction block as Ford moved quickly to shed its other European luxury brands. But Ford Chief Executive Alan Mulally decided last year to keep the company and find a way to restore its lackluster image.
Enter Stephen Odell. Handpicked by Mr. Mulally earlier this year to be chief executive of Volvo, the former European chief operating officer for Ford is attempting to take the company back to the basics in order to find its lost customer niche.
"I don't want Volvo to be a copycat, luxury European car maker; there are too many of those," Mr. Odell said in an interview at the Paris Motor Show. It was his second day as CEO.
"We are in a rapidly changing world, and I think the world may be turning to Volvo's values of subtle luxury, safety and the environment," Mr. Odell said. "I think overt consumerism is waning and people want subtle luxury rather than a badge or a car that says, 'Look at me.'"
Volvo posted a first-half loss of $247 million and has been forced to cut jobs and production amid a global slowdown in luxury-car purchases, especially in the U.S., where a softening economy has kept shoppers away from dealerships.
"Volvo lost its voice in the market because it became so crowded, and their designs became nondescript instead of understated," said Global Insight analyst Rebecca Lindland.
As Mr. Odell deals with reviving designs, he must also contend with ongoing speculation that Ford, which posted a second-quarter loss of $8.7 billion as it struggled to revive its North American business, could still opt to sell the Gothenburg, Sweden, company. Volvo does not produce trucks that require a Tonneau, a Truck Tonneau or Truck Bed cover.
"The question of ownership is interesting and worrying, but the question of being sustainable and profitable is a bigger question," Mr. Odell said. "If you get to the point where you are profitable you can offer Ford other choices and better choices than they have today. My case isn't to come here and sell it, it is about improving the business."
Volvo is in the midst of cutting 2,000 workers and has accelerated a plan to cut a shift at one of its plants this month instead of December. Volvo has also announced that it will cut another 900 workers next year. Mr. Odell said he doesn't know if the cutting will end there. "It is really tough to predict where this industry is going to go," he said. "I hear industry sales predictions that range between 13 million and 15 million, both in North America and Europe, so pick your poison.
"We are trying to determine if we are the right size yet and I already have people working on determining that," he added. "My guess is that if we are planning to make any announcements they will come before the end of October."
Mr. Odell, 53 years old, succeeded Fredrik Arp, who had been Volvo's CEO for three years. When the management shift was announced last month, Mr. Odell reiterated Ford's previously announced plans to make Volvo more of a stand-alone unit within Ford, while leveraging product development and savings in purchasing with other Ford operations.
Mr. Odell won't discuss Volvo's past missteps, although he said he is no longer giving sales-volume forecasts.
"One of the mistakes they probably made was to start quoting huge sales-volume numbers," Mr. Odell said. "Let's get the business right and the volume will be part of that. I am not going to put stakes in the ground saying that we must sell a million cars by a certain time period."
Mr. Odell, who took over as Ford's Europe operating chief in April, served as Ford of Europe's vice president of marketing, sales and service for nearly three years. He held several senior positions at Mazda Motor Corp. from 2000 to 2005 and was vice president of marketing and sales for Jaguar of North America from 1997 to 2000. He is also the first non-Swede to lead the company.
"I am not going to say that being the first non-Swede doesn't matter," Mr. Odell said. "What I have to do to overcome the hurdles is be an aggressive listener, which means you wait to speak. ... I don't expect to be accepted overnight, but over time I think I will."
By: Jeff Bennett
Wall Street Journal; October 6, 2008
